LONDON (Reuters) - OPEC and its allies will stick with their agreement to cut oil supply, pushing for more adherence despite a demand by U.S. President Donald Trump that the producer group ease its efforts to boost crude prices, a Gulf OPEC source said on Tuesday.
Based on current market data, the so-called OPEC+ group is “likely to continue with the production cuts until the end of the year”, the source told Reuters.
The OPEC+ alliance will meet in April to decide its output policy.
Trump, in the latest in a series of tweets about oil prices since April 2018, wrote on Monday: “Oil prices getting too high. OPEC, please relax and take it easy. World cannot take a price hike - fragile!”
Following the tweet, oil prices registered their largest daily percentage drop this year, with Brent crude losing 3.5 percent on Monday. Brent edged up on Tuesday. [O/R]
The source said OPEC+ would continue the supply-cut agreement to balance the market until “they see inventories going down from their current level” to their five-year average.
“There is no doubt we will continue with our reduction as planned and we will push to reach the highest adherence to the cuts as we have decided before,” the OPEC source said.
The Organization of the Petroleum Exporting Countries, Russia and other non-OPEC producers agreed in December to reduce supply by 1.2 million barrels per day from Jan. 1 for six months.
A committee set up to monitor participating countries’ adherence to the deal found compliance at 83 percent in January, according to OPEC sources.
U.S. sanctions on the oil sector of OPEC member Venezuela, a top supplier of sour crude to the United States, have helped support oil prices recently and raised questions whether top oil exporter Saudi Arabia will raise output to fill the gap.
But the Gulf OPEC source said there was no clear data on Venezuela’s crude output decline due to sanctions.
There was also no risk that current crude prices would encourage more U.S. shale oil production, the source said.
“We are not worried that shale oil will go and ruin the party,” the Gulf OPEC source said.
U.S. crude stocks were seen 3.6 million barrels higher in weekly inventory reports, underlining that supply is adequate in the world’s top consumer. The first such report is due at 2130 GMT from the American Petroleum Institute.
Reporting by Rania El Gamal; Editing by Dale Hudson